The Internal Revenue Service warns taxpayers to watch out for promoters who push improper Fuel Tax Credits claims in the fourth day of the 2024 Dirty Dozen list of tax scams.

The Fuel Tax Credit is available only for off-highway business and farming use and not for most taxpayers. But the IRS continues to see instances where unscrupulous promoters or return preparers mislead taxpayers about fuel use and create fictitious documents or receipts for fuel.

The IRS has seen an increased number of fictitious claims for fuel tax credits on Form 4136, Credit for Federal Tax Paid on Fuels. By claiming the fuel tax, these promoters are looking out for their own financial interests by charging the taxpayers inflated fees. But taxpayers should realize the IRS has heightened scrutiny on this scam, and people claiming it improperly risk future compliance action by the IRS.

“Promoters are pushing the accelerator on bad Fuel Tax Credit claims and driving honest taxpayers to a bad choice,” said IRS Commissioner Danny Werfel. “These promoters frequently charge a large fee to the taxpayer to make these false claims. While the scammers drive away with the fees, the taxpayers are left behind with a bad claim and all the risk and responsibility to make it right. Taxpayers must remain cautious and seek out a reputable tax professional rather than a reckless promoter.”

Fuel Tax Credits mark day four of the Dirty Dozen. Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes, including the Fuel Tax Credit.

Watch out for Fuel Tax Credit third-party promoters

The IRS continues to focus on stopping improper Fuel Tax Credit claims. Any taxpayer contemplating participating in any questionable tax scheme should know that the IRS has implemented new identity theft screening filters and processing systems that stop many suspicious Fuel Tax Credit refund claims. Falsely claiming the Fuel Tax Credit is a fraudulent practice with severe consequences, including civil and criminal penalties.

Taxpayers must exercise caution when filing their tax returns and ensure they only claim credits to which they’re entitled. Otherwise, they may face fines and be subject to federal criminal prosecution and imprisonment. If individuals have doubts about the legitimacy of a particular tax credit, they should seek advice from a qualified tax professional.

Report fraud

As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS urges individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242 – Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed Form 14242 and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677 3405
Fax: 877 477 9135

Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to the sections on Abusive tax schemes and abusive tax return preparers.

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Source: IRS